Microsoft has cut off cloud computing services to India's Nayara Energy, following EU sanctions on the oil refinery company.

In a statement from Nayara Energy, the company revealed it had initiated legal proceedings against Microsoft after the "abrupt and unilateral suspension of critical services," with Nayara claiming that Microsoft has restricted the company's access to its own "data, proprietary tools, and products" despite all licenses being fully paid for.

Nayara Energy has filed a petition with the Honorable High Court of Delhi for an interim injunction to "safeguard its rights and ensure continued access to essential digital infrastructure."

According to Nayara, Microsoft's decision is based on its "interpretation" of recent EU sanctions placed on the Indian refinery.

"While the sanctions originate exclusively from the EU, Microsoft - a US-headquartered corporation - has chosen to withdraw services from Nayara Energy without any legal requirement to do so under US or Indian law. This action has been taken unilaterally, without prior notice, consultation, or recourse, and under the guise of compliance. Such moves signal a worrying trend of global corporations extending foreign legal frameworks into jurisdictions where they have no applicability," the company wrote.

The company has not stated which cloud services it relies on from Microsoft, though a report from Reuters said that sources familiar with the matter had informed the publication that among the services impacted were employees' Outlook email accounts and Microsoft Teams.

DCD reached out to Nayara Energy for more information about the company's use of Microsoft. The company responded with its statement regarding the legal filings, adding no further details.

Microsoft declined to comment on the issue to Reuters.

Beyond being a Microsoft customer, Nayara Energy operates a data center. According to the Telecommunications Industry Association (TIA), the data center is located at a refinery site in Gujarat. TIA awarded the data center a design rating level of three on June 29, 2025.

In Nayara's 2023/2024 Annual Report, the company said it was continuing to scale up investments in its IT infrastructure, including a data center "revamp" and setting up a disaster recovery site.

The EU sanctions were revealed on July 18 and target Russia and its energy sector. With Nayara being majority owned by Russia's Rosneft, the company is a big buyer of Russian oil.

The sanctions include a price cap on Russian oil, and the EU will no longer import any petroleum products made from Russian crude except imports from Norway, Britain, the US, Canada, and Switzerland.

Following the EU sanctions, Nayara has struggled to export its refined products. Reuters reports that the company is currently operating at somewhere between 70 and 80 percent of its refinery capacity, with traders growing cautious in dealing with the company.

Nayara separately published a statement responding to the EU sanctions, in which it said it "strongly condemns the European Union’s unjust and unilateral decision to impose restrictive measures on our company."

The company added: "We categorically state that this unilateral move by the European Union is founded on baseless assertions, representing an undue extension of authority that ignores both international law and the sovereignty of India.

"It is to be noted that while many European countries continue to import Russian energy through various sources, they take a high moral ground by chastising and sanctioning an Indian asset for processing Russian crude largely used by its domestic population of 1.4 billion Indians and businesses."